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29 March 2024

DIFC rent dispute: Which Dubai court counts?

Published
By Parag Deulgaonkar

The Dubai Rental Committee has no jurisdiction to hear rent disputes within Dubai International Financial Centre (DIFC), according to a senior official.

“Parties, however, are free to choose the governing law and the forum they deem appropriate for resolving disputes relating to their leases within DIFC jurisdiction,” Brett Schafer, CEO, DIFC Properties, told Emirates 24|7.

His response came after media reports claimed lawyers stating that DIFC Courts were referring rent disputes to the Rental Committee in Dubai Municipality for settlement.

“DIFC Courts certainly do hear rental disputes for residential apartments in DIFC and have done so on several occasions through the Small Claims Tribunal and through the main court,” Schafer said.

“This jurisdiction may arise through the parties opting, at the time of contract negotiation, to choose the DIFC Courts as their preferred dispute resolution forum.

“It may also arise through the DIFC Courts’ statutory jurisdiction over such matters.”

Dubai Law No 26 of 2007 (Dubai’s landlord-tenant law) is not intended to apply within DIFC, clarified Schafer.

The system of land registration (including for leases) in DIFC is administered by the DIFC Registrar of Real Property and is separate from the land registration system, including the Ejari lease registration system, administered by the Dubai Land Department and Real Estate Regulatory Agency.

“The Dubai Rental Committee hears and determines cases relating to leases registered with Real Estate Regulatory Agency’s (Rera) Ejari system and therefore, does not include DIFC registered properties as part of its jurisdiction,” he asserted.

Landlords in Dubai have been arbitrarily increasing rents for the past 18 months, forcing tenants to either accept the unreasonable hike, or vacate the apartments.

Generally, expect DIFC, the rent index provides for the maximum annual rent increase, but is not binding on the landlord.

The Rental Committee refers to the index at the time of dispute settlement, with their decision being binding and unchallenged.

Residential rents have been on the rise in Dubai with the property market recovering from the lows of 2008.

Knight Frank Prime Global Rental Index has revealed rents in the emirate rose by 18.3 per cent in the year to March.